Deutsche CEO puts management on blast; Chinese banks use lie detectors

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HSBC beats
HSBC said its third quarter earnings jumped 32% to $3.9 billion. Revenue rose while operating expenses fell. Wall Street Journal, Financial Times

Wall Street Journal

Warning signal?
Capital One and Discover "are tightening lending standards, an unusual move in a strong economy that may signal longer-term concerns about consumers' financial health. The two lenders said they don't currently see signs of deterioration in consumers' ability to pay their debts but do question how much longer the economic recovery will last."

Jumping on the bandwagon
Warren Buffett's Berkshire Hathaway has now invested about $600 million in two big fintech companies in emerging markets: Brazilian payments processor StoneCo. Ltd. and Indian mobile payments firm Paytm. "Both investments were spearheaded by Todd Combs, one of Berkshire's two portfolio managers."

Wait just a moment ...
The Consumer Financial Protection Bureau said it plans to formally revisit early next year its regulation on payday lending, including revising "the core and most-stringent aspect of the existing rule: a requirement that payday lenders make sure borrowers can repay the loans." The current rule, which is scheduled to go into effect next August, is opposed by the payday lending industry, and "banks have said they were considering entering the short-term personal loan market to take advantage of the new market environment."

BofA's Terry Laughlin dies
Bank of America vice chairman Terry Laughlin, who headed the bank's wealth-management business and was a close adviser to CEO Brian Moynihan, has died. He was 63. "After Mr. Moynihan took the top job in 2010 with a mandate to repair the teetering bank, he appointed Mr. Laughlin to a variety of senior roles, including salvaging the bank's troubled mortgage portfolio and helping the lender resubmit its Federal Reserve stress test."

Make it even
The U.K.'s High Court ruled that Lloyds Banking Group must equalize pension benefits for men and women employees, a decision that will likely cost the bank between £100 million ($128.3 million) and £150 million, as well as have "implications for thousands of other [British] corporate pension plans, resulting in billions in additional costs." The court said the bank's pension trustee must retroactively increase payouts to women employees, who argued that their pensions were increasing at a lower rate than that of male workers.

Financial Times

Strong language
Deutsche Bank CEO Christian Sewing blasted the bank's senior managers, using an expletive to denounce speculation about a possible merger with rival Commerzbank as an excuse for DB's recent poor performance. On a call last week with managers, Sewing said it was "'[bovine excrement]' to use merger speculation as an excuse for not doing their job and not achieving targets with clients, prompting laughter and applause in the room in Frankfurt and among bankers watching webcasts in cities such as London and New York."

We know you're lying
Chinese banks have started using new technology that they believe can spot whether a customer is lying based on their facial movements. The technology uses "smartphone cameras to detect minute facial expressions and indicate when a user is being economical with the truth. Chinese banks are among the first in the world to use the technology commercially. Western groups have so far shied away from the technology because of concerns about its reliability and the ethics of using it."

Shadow removed
"In what amounts to a get-out-of-jail card for Barclays," the U.K.'s High Court dismissed demands from the Serious Fraud Office to impose criminal charges against the bank for raising money from Middle Eastern investors to avoid a government bailout during the financial crisis. The decision "removes a five-year-old shadow hanging over Barclays" and "is a blow for the SFO in one of its flagship cases."

Case dismissed
A New York jury took less than a day to acquit three former London-based traders of conspiring to fix foreign currency prices. "The loss is a serious setback for the U.S. Department of Justice, which, alongside the U.K. Financial Conduct Authority, has extracted more than $10 billion in fines from settlements with banks over the foreign exchange scandal."

Regulate now
Marshall Billingslea, the president of the Financial Action Task Force, says "urgent action is needed" to regulate digital currencies, which, because of their "anonymity, speed and global reach," make them "attractive to both criminals and terrorists. If financial activities involving virtual assets are left unregulated or under-regulated, malign actors will be able to move funds whenever, and wherever, they want."

Elsewhere

Staying put
Americans are staying in their homes a lot longer than they used to, a trend that has "created stagnant conditions and a less dynamic housing market." Attom Data Solutions said houses sold in the third quarter had been owned an average of more than eight years, almost double the figure from 2000.

Quotable

"For years, he's been the go-to problem solver in that company and its predecessors for the most difficult, vexing banking issues." — Edward Herlihy, a partner at Wachtell, Lipton, Rosen & Katz, about Bank of America vice chairman Terry Laughlin, who died unexpectedly last week.

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